Viatical Life Settlement
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The option of viatical life settlement can make a huge difference for families who face large financial obstacles. However, as with all business transactions, there are many pros and cons associated with these agreements. The way that these settlements work is very basic and straightforward. Policyholders will sell their insurance policy to an individual or to a group of investors for a percentage of the total amount of the death benefit. The word viatical has some interesting origins. It was taken from the Latin word viaticum. This word basically deals with provisions that are made for a journey, but also is applied to a type of last rites that is sometimes offered when an individual is near death. This connotation is particularly apt when taken in consideration with the dilemmas that are faced by many individuals who choose this option. Terminally ill policyholders will often choose this arrangement as a way to pay for crushing medical expenses. The elderly may choose this option as well as a way to finance the latter portion of their lives. Such funds could be used for a variety of reasons. In addition to medical expenses, some families turn to this alternative as a way to prevent foreclosure on the family home or maintain living expenses when a policyholder has retired from the work force. Investors can benefit greatly as well, trading up front cash for future revenue while realizing a sometimes tidy profit. It would appear that a viatical life settlement is beneficial to all concerned, but this may not always be the case.
It is very important to attain wise council when considering the option of viatical life settlement. Some organizations may try to take advantage of the policyholder's desperate situation by offering far less money than the seller is fairly entitled to. In addition to speaking with an insurance agent, it could be wise to seek legal advice to make sure that the contract is on the up and up. No one wants to be involved in any kind of fraudulent arrangement. If a policyholder finds that they are suffering from a serious or terminal illness, these contracts can be a good alternative to financial devastation or out right bankruptcy. Funding agents, on the other hand, cannot hold the seller responsible if the seller is able to recover and greatly expand their life expectancy. Since the funding agent will not collect until the original policyholder passes away, the risks to the funding agent are obvious. To many individuals, this process can have something of a dark connotation. But for those in need of the funds that are made available through these contracts, this may be the only viable alternative. In many cases, purchasers may not be able to insist that policyholders undergo a medical exam before the sale of the policy is completed. However, making medical records available will generally be required. Regulation has not yet caught up with these contracts in many locations. This creates all the more reason for anyone who is considering a viatical life settlement to consult legal representation before signing any contracts.
The main difference between a standard life insurance policy and a viatical life settlement is the life expectancy of the insured individual. With standard insurance, a policy holder pays regular premiums in exchange for a lump sum of money that will be paid to a beneficiary at the time of the policyholder's death. For an agreement to be considered viatical, a shorter life expectation will come into play. Generally, anyone who's expected life span is less than two to fifteen years is eligible for a viatical life settlement arrangement, although these requirements may differ from provider to provider. There are many pros and cons that are associated with these contracts. A much quicker access to the death benefit of the policy is the most obvious benefit. Many policyholders will help to fund their own retirement through a life settlement. There may be positive tax consequences for some individuals. A seller will also no longer have the obligation to stay current in the payment of insurance premiums. In most cases, a seller may have two weeks or more to rescind the agreement if they should, for some reason, change their mind. Some of the drawbacks to these contracts could include the acquisition of income that is taxable in some cases. The future cash value of the policy will be completely unavailable to the policyholder. Beneficiaries will receive no death benefits when the policyholder passes away. There may also be cases where specific types of policies are not eligible for this type of transfer.
The peace of mind that can come from taking advantage of a viatical life settlement can be very important. A terminally ill individual has enough to deal with without the added stress of financial woes. Using life insurance policies to leverage financial help can be a real source of encouragement for suffering individuals. The Bible lets believers know that there is great strength and courage to be found in depending upon God. "Wait on the Lord: be of good courage, and he shall strengthen thine heart: wait, I say, on the Lord." (Psalm 27:14)
There are professional brokers who specialize in viatical life settlement cases. These brokers will work on behalf of a client to help them find the best terms on a settlement agreement. Even with the assistance of these brokers, additional legal advice may be required. Whatever choice a policyholder might make, professional advice is very important. While there are many benefits and drawbacks to these arrangements, they can provide important financial help for many individuals.
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